We now have a clearer picture of how Apple Music compares to Spotify in terms of royalties.
Citing a disclosure letter sent to creators on Friday through Apple Music’s artist dashboard and posted in full by 9to5Mac, the Wall Street Journal first reported that the service pays artists an average of a penny per stream (equivalent to one U.S. cent) — which sounds paltry, but is significantly higher than Spotify’s payouts. Those amount to just a third to a half of a penny per stream, according to the Journal, meaning that Apple Music on average at least doubles and even triples what its rival pays out to artists.
Complicating the matter, however, is payouts themselves. The Journal noted that artists aren’t paid directly by the streaming services but by rights holders with whom they have contractual agreements for distribution. In other words, 50 plays of an artist’s song does not necessarily amount to 50 U.S. cents ($0.65) in their bank account.
Neither service immediately returned a request for comment about their payment terms for creators, including whether they have any stipulations in place about how much of a song must be played before it qualifies for a payout.
The Apple Music disclosure does, however, leave Spotify with some egg on its face. Spotify is a much larger platform than Apple Music, and it’s offered as a freemium platform. Spotify says it has 345 million users, 155 million of which are paid subscribers. Apple Music is estimated to have around 72 million subscribers as of June 2020, according to figures from Statista. With the exception of free trial periods, Apple Music is a paid subscription service offered at $11.99 per month. Spotify’s premium tier, meanwhile, also costs $11.95 per month for ad-free listening.
Spotify launched its Loud & Clear transparency initiative last month in an attempt to address questions about its streaming economics. In a question and answer section of the site, the company addresses why per-stream rates “appear lower for Spotify than some other streaming services.” The three primary reasons it lists there are its global audience that impacts its revenue-to-streams ratio, high streams per listener, and its ad-supported tier, which the company claims once taken away sends users to “non-revenue-generating alternatives, meaning the collective music industry is missing out on revenue.”
“There are a number of factors that contribute to that ratio looking small, which we understand can seem problematic,” the site states. “We don’t believe it is; we are confident our model is maximising revenue for everyone.”
Apple said in its letter that stream value “varies by subscription plan and country” but averaged to about a penny per play for Apple Music individual plans last year.
“At Apple Music, our focus remains on artists and songwriters and finding new and innovative ways for all creators to make a living from music,” the company wrote. “With Apple Music, music fans around the world enjoy an uninterrupted ad-free experience while knowing their data is kept private and used only to enhance the overall music experience for them.”